Netflix had an all-around solid first quarter, pulling in revenue of $394.1 million, up from $326.2 million.
Netflix had an all-around solid first quarter, pulling in revenue of $394.1 million, up from $326.2 million. And it simultaneously added subscribers while dropping the cost per subscriber.
The home-movie delivery firm’s net income jumped from $13.3 million a year ago to $22.4 million during the quarter ended March 31.
The company also managed to keep subscription and fulfillment expenses to 65.8% of revenue, compared with 68.3% during first-quarter 2008.
The company ended the quarter with 10.3 million subscribers, up from just over 8.2 million subscribers at the end of first-quarter 2008. Netflix anticipates a subscriber base of between 11.2 million and 11.8 million individuals by the end of 2009.
While the raw number of subscribers increased, the cost to acquire them on a per-individual basis dropped. In first-quarter 2008 it stood at $29.48: For the quarter just ended it was $25.79.
During an earnings teleconference, CFO Barry McCarthy attributed the low subscriber acquisition costs to a weak advertising climate and strong growth across paid acquisition channels combined with organic growth. McCarthy added that he expects the low acquisition costs to continue during the remainder of the calendar year. In fact, he lowered his earlier estimation, namely that acquisition costs would remain below $30. These costs, he said, would in fact be below $28 through the end of the year.
If there is a single major concern, it is competition from in-store dollar movie kiosks. CEO Reed Hastings noted that as standalone video stores continue to close, kiosks are becoming the company’s number-one competitor.
